5/27/2002 @ 12:00AM

For Rent: Prime Office Space Around The World

When we asked executives at Cushman & Wakefield, a real estate services company in New York, where clients were most likely to be scouting for new offices, they had only one word for us: China.

John Coppedge, its head of international operations, said: “Everyone is putting their hopes in China.” Not for the first time, of course. But this time, global companies are not just moving manufacturing into the country; they are setting up regional headquarters in Shanghai’s gleaming new office towers.

What does that mean for Hong Kong, once the prefered entrepôt for outsiders doing business with China? Rents there fell 14% in the last months of 2001 alone, according to Cushman & Wakefield. And things could get worse for landlords there. It still costs twice as much to maintain an office in Hong Kong as it does in Shanghai.

“It used to be that if you wanted to set up an office in China, you had to go to Hong Kong, hire a lawyer, hire a banker and take them with you to China,” says Coppedge. “Now you don’t need to stop in Hong Kong. Chances are that your law firm and bank already have offices in Shanghai or Beijing.”

The table to the right shows the total occupancy cost for the best office space in the central business district of 41 cities. Total occupancy cost is the sum of base rent, property tax and other operating expenses that prospective tenants would have to pay annually per square foot.

Rents have been flat in most major centers, except for Moscow, where there isn’t much available space. London remains the most expensive market in which to set up shop, with property taxes running more than 20% of base rent contributing to the price tag of $124 a square foot there. With the yen so weak, office space in Tokyo can now be had for less than $100 a square foot.